O-i Glass, Inc. · NYSE:OI
O-i Glass — Owens Illinois — Bank of America Merrill Lynch 2014 U.S. Basic Materials Conference
19 slides from O-i Glass's conference presentation, Dec 11, 2014
Slide 1: Bank of America Merrill Lynch 2014 U.S. Basic Materials Conference
Bank of America Merrill Lynch 2014 U.S. Basic Materials Conference Owens-Illinois, Inc. December 11, 2014
Slide 2: Safe Harbor Comments
Safe Harbor Comments Regulation G The information presented here regarding adjusted net earnings relates to net earnings from continuing operations attributable to the Company exclusive of items management considers not representative of ongoing operations and does not conform to U.S. generally acce
Slide 3: O-I: The only truly global glass container franchise
O-I: The only truly global glass container franchise #1 position in Europe #1 position in North America #1 position in Oceania #1 position in South America Leading position within SE Asia Foothold in China Emerging markets Mature markets Strong, brand-building partnerships with blue chip companies L
Slide 4: Consistent end-market demand trends
Consistent end-market demand trends 3 Europe Stable end markets Exports outperform domestic demand Asia Pacific Sluggish demand in Oceania Mid single-digit growth in China & SEA North America Growth in craft beer, wine, spirits, premium food and non-alcoholic beverages Ongoing decline in megabeer So
Slide 5: Creating shareholder value
Creating shareholder value O-I’s global presence O-I’s unparalleled expertise Over 100 years of experience Stable end markets Steady glass demand Consumer preference for glass 4
Slide 6: 4Q 2014 business outlook
4Q 2014 business outlook 5 Operational 4Q14 vs. 4Q13 Europe Sales volume flat Continuing benefits from asset optimization FX headwind North America Sales volume down mid-single digits Production curtailments to manage inventory South America Sales volume flat, with uncertainty in Brazil Improved pro
Slide 7: 2015 business outlook
2015 business outlook 6 2015 YoY segment operating profit on an FX neutral basis* Europe Stable volume Continued savings from asset optimization program North America Stable volume, with more exposure to beer imports Productivity and supply chain improvements South America Volume plateaus against st
Slide 8: Currency headwinds intensify
Currency headwinds intensify 7 Dec 2014 FX rates compared with Jan-Nov 2014 rates South America -14% Europe -8% Asia Pacific -8% O-I Total -11% Note the following time periods: Current FX rates as of December 8, 2014 2014 rates are average January – November 2014 At current rates, the strength of US
Slide 9: 2015 non-operational outlook
2015 non-operational outlook 8 Higher year-on-year corporate expense Higher pension expense Subject to year-end discount rates and impact of adopting new mortality tables Partially offset by actions to mitigate pension liability Long-term investments in R&D expected to continue Increase partially of
Slide 10: Enhancing financial flexibility: Debt Refinanced in 4Q14
Enhancing financial flexibility: Debt Refinanced in 4Q14 * Leverage Ratio defined as gross debt less cash divided by EBITDA. Target Leverage Ratio New debt New debt 9
Slide 11: Pension expense headwind since 2008
Pension expense headwind since 2008 Current pension headwinds sharply contrast with pre-recession era Sustained non cash pension expense1 substantially lowers reported Company financial performance 1 Related to the “amortization of actuarial loss” component of pension expense. 2 Adjusted earnings re
Slide 12: Enhancing financial flexibility: Pension
Enhancing financial flexibility: Pension Manage pension liabilities Reduce benefits and close plans to new hires Convert to defined contribution plans Buy out term vested participants Annuitize Manage pension assets Make discretionary cash contributions Pension liability reduced by ~$750M from actio
Slide 13: Favorable trends in asbestos payments
Favorable trends in asbestos payments Outstanding cases down ~80% since 2008 Average age of claimant is >80 years old Payments down ~30% since 2008 12
Slide 14: Strong and stable cash flow generation
Strong and stable cash flow generation Key assumptions for 2015 Segment operating profit comparable with 2014 in USD terms No contribution from working capital Lower outlay for asbestos, $5 - $10 million decrease Capex + restructuring continue to approximate D&A Steady FX rates at current levels 13
Slide 15: Balanced approach to use of cash
Balanced approach to use of cash 14 • Continue strong operating profit generation • Enhance productivity and flexibility Maintenance • Exceed cost of capital • Greenfield/brownfield (e.g., Brazil furnace in early 2013) • Non-organic growth (e.g., JV with CBI in Mexico) • Invest in technology and inn
Slide 16: Q&A
Q&A 15
Slide 17: Appendix
Appendix 16
Slide 18: Reconciliation to Free Cash Flow
Reconciliation to Free Cash Flow 17 $ Millions 2013 2012 2011 2010 Cash provided by continuing operating activities 700 $ 580 $ 505 $ 600 $ Additions to property, plant and equipment - continuing (361) (290) (285) (500) Free cash flow 339 $ 290 $ 220 $ 100 $ Year ended December 31
Slide 19: Leverage Ratio Reconciliations of Adjusted EBITDA and Net Debt
Leverage Ratio Reconciliations of Adjusted EBITDA and Net Debt 18 $ Millions 2013 2012 2011 2010 Earnings (loss) from continuing operations 215 $ 220 $ (491) $ 297 $ Interest expense 239 248 314 249 Provision for income taxes 120 108 85 129 Depreciation 350 378 405 369 Amortization of intangibles 47
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